Frogs in a pot

There‘s a well-used example in scientific circles about the perils of adapting to short-term change while missing the big picture. That‘s what “frogs in a pot” is all about. The story goes that if you put a frog in a pot of water and then slowly increase the heat of the water, the frog will stay put - adapting to each increase in temperature - until it gets boiled to death.

When it comes to oil and fuel prices - both gasoline and diesel - we‘ve been that frog in the pot, adjusting ourselves to ever higher and higher prices. The question now is whether we‘ll get out of the pot before we, as a nation, get boiled to death. The recent explosion in biofuel production efforts - both ethanol and biodiesel - coupled to existing alternative efforts in the natural gas area gives some hope at least that we may indeed escape the frog‘s fate. Yet that remains to be seem for we have a long way to go.

Look at the global picture: according to the Energy Information Agency (EIA), global energy demand is going to keep growing despite the relatively high world oil and natural gas prices. However, the agency projects that rising oil prices should dampen growth in demand for petroleum and other liquids fuels after 2015 and, as a result, reducing their share of overall energy use from 38% in 2004 to a projected 34% in 2030. In contrast, the energy shares of natural gas, coal, and renewable energy sources are expected to grow over this period.

Still, liquid fuel consumption is still expected to grow strongly, reaching 118 million barrels per day in 2030, with the U.S., China, and India together account for nearly half of the projected growth in world liquid fuel use.

And the EIA‘s analysis is coming on the heels of some disturbing near-term supply trends. Our web editor, Justin Carretta, recently wrote a story about oil prices breaking the $100 per barrel mark and got some scary comments from Denton Cinquegrana, markets editor for the Oil Price Information Service (OPIS).

Cinquegrana said predictions for the price of oil in 2008 remain high. “Even with the most conservative estimates, all forecasts for 2008 are for well over $80 a barrel,” he said, adding that it is hard to tell how long it will stay in the $90s--it could be a few weeks, a few months, or even longer.

And this historic oil price comes on the heels of a recent report that suggests oil-producing countries may not be able to meet demand sooner than anticipated. According to the Associated Press, the December issue of the OPEC Review, published by the Organization of Petroleum Exporting Countries (OPEC) said that its countries might not be able to meet demand at some point between 2024 and 2048, with several countries unable to produce their share even sooner.

OK, this is troublesome, sure. But we‘re also seeing a big movement towards alternative fuels that could ease vehicle fuel crunch -- if it all pans out. Blue Sky Bio-fuels and the city of San Francisco, for example, are partnering to use waste grease from restaurants to make biodiesel for the city‘s school buses - which has the added benefit of stopping such waste grease from being dumped into the city‘s sewer system.

“Our goal is to help California reduce its carbon footprint and become less dependent on foreign oil,” said Patrick MacIntyre, president of Blue Sky Bio-fuels. "Our solution is a triple win proposition where cities have their waste grease turned into a renewable ... cleaner burning fuel at a price that is competitive with diesel.”

Blue Sky Bio-fuels, located in Oakland, CA, has designed and engineered a 20 million gallon per year facility and MacIntyre said as long as they can keep their biodiesel priced competitively for the school districts, it‘ll prove itself to be a better alternative to petroleum diesel.

Richard Kolodziej, president of NGVAmerica, noted that natural gas is gaining more traction as a vehicle fuel as he noted that natural gas costs only $40 per equivalent barrel when compared to $100 per barreloil. “In the past, there were substantial societal benefits of using more natural gas as a vehicle fuel - such as reducing dependence on foreign oil, reducing greenhouse gases and reducing urban pollution,” he said. “Now, as the price gap between petroleum and natural gas widens, we‘re seeing a major economic advantage, too. As a result, 2008 will be a milestone year for natural gas vehicles (NGVs) in the U.S.”

Kolodziej added that in 2007, the U.S. used about 250 million gasoline-gallons-equivalent of natural gas for vehicles, with high fuel-use fleet vehicles, such as transit buses, school buses, trash trucks, and delivery vehicles remaining major targets for conversion. He added that, to encourage the shift to NGVs, the federal government is offering income tax credits that range from $2,500 to $32,000 for the purchase or conversion of NGVs.

So maybe we are at a turning point - maybe this time the frog will jump out of the pot before it‘s too late. Let‘s hope we do.